To Insource or outsource – a key decision facing most businesses

Insource or outsource?

In a globalised labour market where businesses actively compete, talent acquisition and retention is increasingly becoming the new battlefield. If managed well either by business owners or by strong, well resourced and competent HR teams, the recognition of talent and the value of labour is well understood and reinforced in their work culture. For most, talent isn’t well managed or nurtured. With the erosion of the ‘job-for-life’ / ‘job security’ ethos that most businesses up until the 1980’s possessed, the labour market now works on a completely different paradigm. Labour or ‘talent’ as I call it, are far more mobile, have stronger bargaining power and smarts to be far more selective and discerning when it comes to what work they do and under what conditions.

An increasing shift in power favouring ‘talent’ has meant that businesses now are faced with a conundrum being, whether to insource or outsource certain functions within their business.

The insource versus outsource dilemma can be vastly different across individual businesses, industries and core businesses fundamentals. Accordingly, rather than fall into the trap of over generalisation, for the purposes of this article, let us limit our commentary to the area of ‘IT’ and more specifically ‘Digital Projects’. Given that most businesses usually have at any one time a series of projects in parallel, the question must be asked as to HOW best (and most efficiently) should a business resource up to ensure talent is available to commit to the successful delivery of project work. The answer to HOW will be predicated on a range of factors. Availability and utilisation of existing resources being a key driver. So too budget and priority of the project against all other projects. Digital Rehab takes the view that a fine balance between insourcing and outsourcing should be the aim where core activities, support etc should be internalised while most of a projects risks should be managed and mitigated by outsourced vendors. This balance is an art. Our observation has been in recent times, in Australia in particular, most businesses elect to outsource entire bodies of work. While this most commonly does improve deliverability, it compromises a businesses ability to stay on top of and across all the intricacies of projects – particularly if they be transformative IT / digital in nature. Instead, we (Digital Rehab) forms the view that outsourcing should be used for key milestones and ‘sprints’ of a project while insourcing should endure throughout a project to provide continuity and minimise Intellectual Property drain/leakage.

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